# The Help to Buy: equity loan scheme What you need to know before you go ahead

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3 Mortgages Information Page 3 of 5 How is the interest calculated on my equity loan? The equity loan provided by the Government is interest free for the first five years of the scheme. After that, if you haven t already repaid your equity loan in full, from year six you ll pay gross interest to the Government of 1.75% on the outstanding equity loan amount. This amount of interest will increase each year from year seven by the annual increase in the Retail Price Index (RPI) inflation plus 1%. The illustrations below show how interest on the equity loan is calculated, if the annual increase in the Retail Price Index (RPI) was estimated at 5%. n From year six, interest at 1.75% would be charged on the amount of the equity loan. The monthly mortgage is based on the first five years being on our 5 Year Fixed Rate Mortgage of 2.79% then changing to our Standard Variable Rate (SVR), currently 4.74%. Rates correct as at 1 June n From year seven, if the annual increase in the RPI was 5% the interest payable on the equity loan would increase by 6% (i.e. increase in RPI of 5% + 1%). So interest on the equity loan would then be charged at (1.75% x 6%) % = 1.86% Based on property value 200k, mortgage 150k, equity loan 40k (20%) and customer deposit 5k Based on property value 600k, mortgage 330k, equity loan 240k (40%) and customer deposit 30k Year interest on equity loan Outside London mortgage Total monthly Year Year Year 1o Year Year Year ,016 Year interest on equity loan Inside London mortgage Total monthly Year 1 0 1,704 1,704 Year ,879 2,229 Year 1o 442 1,879 2,321 Year ,879 2,471 Year ,879 2,671 Year 25 1,058 1,879 2,937 3,000 2,500 2,000 3,000 2,500 2,000 1,704 2,229 2, , , ,937 1,058 1,500 1,500 1, , ,000 1,704 1,879 1,879 1,879 1,879 1, Year 1 Year 6 Year 10 Year 15 Year 20 Year 25 0 Year 1 Year 6 Year 10 Year 15 Year 20 Year 25 n mortgage n interest on equity loan n mortgage n interest on equity loan Please note, all rates are for illustrative purposes only.

### The Help to Buy: equity loan scheme What you need to know before you go ahead

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